Hong Kong, October 10, 2012 -- Moody's Investors Service says that its Asian Liquidity Stress Index
(Asian LSI) rose for the third consecutive month in September and now
stands at 23.8%, up from 21.8% in August
and 16.8% in July.
"The index is now at its highest level since the first quarter of
2010. At the same time, the Asian LSI, which increases
when speculative-grade liquidity appears to decrease, remains
well below the high of 37% recorded in the fourth quarter of 2008,
during the financial crisis," says Laura Acres, a Moody's
Senior Vice President.
"Specifically for September, the change reflects the net addition
of two companies to the lowest speculative-grade liquidity score
category (SGL-4), which now totals 24 companies,"
says Acres.
Acres was speaking on the release of Moody's latest report on the index,
entitled "Asian Liquidity Stress Index."
"Looking ahead, we expect that issuance will remain sporadic
and opportunistic until the situation in the euro area shows some signs
of stability," says Acres.
"In addition, overall liquidity for Asian speculative-grade
companies may deteriorate if the sovereign debt problems in the Euro area
hurt economic growth in Asia, or if it causes lenders to further
tighten their lending standards, which would affect lending rates
to speculative-grade companies," adds Acres.
The report notes that the level of corporate family rating downgrades
for speculative-grade companies continues to exceed the number
of upgrades. In the third quarter, there were nine downgrades
and three upgrades, making July-September the fifth consecutive
quarter where downgrades exceeded upgrades. September also saw
the first Asian fallen angel for more than two years.
The report says that most Asian speculative-grade companies now
have stable rating outlooks, but 37.6% of Moody's
issuer outlooks are negative or on review for downgrade, up from
August and at the highest level since the fourth quarter of 2008,
the peak of the global financial crisis.
The net amount of high-yield debt Moody's rates in Asia rose
to USD41.7 billion at the end of September, from USD40.9
billion in August. Three deals closed in September: RKI Finance
(2012) Ltd's USD350 million senior notes due 2017 and guaranteed
by Road King Infrastructure Limited (B1 stable); Kaisa Group Holdings'
(B1 negative) USD250 million 12.875% notes due 2017;
and Fantasia Holdings Group (Co) Ltd's (B1 stable) USD250 million,
13.75%, five-year senior unsecured notes.
Subscribers can access this report via this link: http://www.moodys.com/viewresearchdoc.aspx?docid=PBC_145823.
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Laura Acres
Senior Vice President
Corporate Finance Group
Moody's Investors Service Hong Kong Ltd.
24/F One Pacific Place
88 Queensway
Hong Kong
China (Hong Kong S.A.R.)
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Philipp L. Lotter
MD - Corporate Finance
Corporate Finance Group
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Moody's: Asian Liquidity Stress Index rises again in September